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Propertymark pressure leads to improved guidance

Wednesday 09 September 2020

Propertymark has welcomed improved Joint Money Laundering Steering Group (JMLSG) guidance on pooled client accounts (PCAs) following our response to JMLSG’s review and sustained engagement with HM Treasury and UK Finance to make it easier for letting agents to meet their legal obligations.

In June, Propertymark responded to the JMLSG proposed draft guidance on Pooled Client Accounts and has engaged with a number of banks, industry bodies, and Government officials to highlight the fact that previous guidance did not coincide with legal requirements on letting agents for Anti-Money Laundering (AML) and the Client Money Protection (CMP) regulations.

JMLSG is a private sector body that is made up of the leading UK Trade Associations in the financial services industry. It produces guidance to assist those in financial industry sectors represented on JMLSG to comply with their obligations in relation to the UK Anti-Money Laundering and Counter-Terrorist Financing legislation. The guidance is not legally binding but receives HM Treasury approval.

Why change was needed

Financial institutions need to be aware that under the Money Laundering Regulations the scope of regulated businesses in the property agency sector was expanded in January 2020 to only include the letting agency sector for high-value transactions with a monthly rent of 10,000 euros (or an equivalent amount) or more, whereas all letting agents in England, Wales and Scotland must adhere to Client Money Protection rules.

This is important because within the framework for Pooled Client Accounts, letting agents find it very difficult to open client accounts with no legal requirement for all letting agents to register with HMRC for Anti-Money Laundering Supervision. Consequently, this makes it very difficult for letting agents to adhere to the Client Money Protection rules.

Improved guidance

The revised 2020 guidance now acknowledges the distinction between the AML and CMP requirements for letting agents. This means that banks should be considering whether the customer is subject to the AML Regulations, and any other regulatory or professional conduct obligations such as client identification rules, professional conduct rules relating to dealing with funds in PCAs, or client money protection regulations.

Propertymark will continue to work with agents who encounter difficulties with banks in setting up client accounts, but the improved guidance should make it easier for letting agents to obtain PCAs going forward.

JMSLG Guidance

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This is a positive development and we are pleased that the guidance on Pooled Client Accounts has been updated in light of our calls for the banks to better recognise the legal requirements for letting agents.

We know that many agents have found it very difficult to open client accounts with no legal requirement for all letting agents to register with HMRC for Anti-Money Laundering Supervision. Consequently, this makes it very difficult for letting agents to adhere to the Client Money Protection rules.

With the legal requirements on letting agents being made clearer to banks, they should now be able to distinguish between the two sets of regulations whilst taking reasonable measures to establish and document the purpose of the Pooled Client Accounts.

Timothy Douglas

Timothy Douglas
Policy & Campaigns Manager